Small businesses exempted from proposed tax hikes, according to Merz
Federal Chancellor Friedrich Merz of the Christian Democratic Union (CDU) has called for a realignment of social policy and urged the Social Democratic Party (SPD) to work together to improve communication, as a tax dispute between the two parties escalates.
Speaking at a CDU Lower Saxony party conference in Osnabrück, Merz criticized the previous work of the black-red government, expressing dissatisfaction with the results achieved so far. He reiterated the need for a new migration policy and economic turnaround, and emphasized that the current social state is no longer affordable economically.
The current tax dispute revolves around the SPD's push for higher taxes, particularly on top earners and wealthy individuals. Vice-Chancellor Lars Klingbeil of the SPD has not ruled out this option, stating in a recent interview with ZDF that no option is being taken off the table.
However, Merz has ruled out any additional burden on the middle class, specifically an increase in income tax for medium-sized businesses in Germany. He stated that there are some in the SPD who "take pleasure in discussing tax increases."
Merz did not specify the changes or reforms he is referring to in the social policy realignment, but he made it clear that he is challenging the Social Democrats to make changes and implement reforms. He also emphasized that he will not be distracted by terms like "social cuts" and "clear-cutting."
The billions in deficits in the upcoming federal budgets are the background to the current tax dispute. Merz called for an SPD that continues the common path "critically of migration and industry-friendly." He also called for cooperation between the SPD and his own party to improve communication.
The SPD advocates for tax increases on higher income groups, including raising the top tax rate and reintroducing a wealth tax, while the CDU and Christian Social Union (CSU) oppose tax hikes, emphasizing tax reductions for small and middle incomes as outlined in the coalition agreement.
Merz urged both parties to talk to each other, not over each other, as the tax dispute threatens to derail the coalition government. The future of the German economy and social welfare system hangs in the balance, as both parties grapple with the challenges ahead.
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